- Knight Frank forecasts average prime price growth across 20 global cities rising from 1.6% in 2026 to 2.2% in 2027.
- The acceleration comes less from strong markets getting stronger than from correction markets returning to positive growth.
- Seoul leads both years at 11% then 6%. Tokyo and New York share second place in 2027. Milan is Europe’s highest-ranked city throughout.
- London is the notable exception, forecast to fall in 2026 before stabilising in 2027 under non-dom reform and high borrowing costs.
The world’s prime residential markets are set to grow faster in 2027 than in 2026. That is the headline from Knight Frank’s July forecast, and the number itself is modest: average prime price growth across its 20-city index moving from 1.6% to 2.2%. What makes it worth attention is not the size of the acceleration but its source. This is not a boom returning. It is a broad set of markets that spent two years in correction finally reaching the bottom of it, while the strongest performers keep compounding. For anyone buying at the top end, that distinction changes the timing question entirely.
What the Forecast Actually Says
Knight Frank’s 20-city forecast puts the following at the top of the table for 2026 and 2027.
| City | 2026 forecast | 2027 forecast |
|---|---|---|
| Seoul | 11.0% | 6.0% |
| Tokyo | 7.0% | 5.0% |
| New York | 5.0% | 5.0% |
| Hong Kong | 6.5% | 4.0% |
| Milan | 5.0% | 4.0% |
| Monaco | 4.0% | 4.0% |
| Lisbon | 4.5% | 3.5% |
| Madrid | 4.5% | 3.5% |
| Paris | 2.0% | 2.5% |
| London | -2.0% | 2.0% |
Read the two columns together and the mechanism becomes obvious. Most of the leading cities are forecast to grow more slowly in 2027 than in 2026. The index average still rises, because the cities at the bottom stop falling.
The Acceleration Is Coming From the Bottom, Not the Top
Seoul is expected to be the strongest performer in both years, supported by a prolonged shortfall in new housing supply and by wealthy domestic buyers and overseas Koreans concentrating on trophy assets in the capital’s most desirable districts. Its forecast still nearly halves, from 11% to 6%.
Meanwhile the correction markets are finding a floor. Beijing and Shanghai remain under pressure from elevated supply and weaker buyer confidence, though policy support is stabilising activity. Vancouver is working through high inventory after a wave of apartment completions. Melbourne and Sydney face higher interest rates and recent tax reforms that reduce borrowing capacity. All of them improve on 2026 without turning strongly positive.
That is what a 0.6 point rise in an average looks like when it is built this way. It is a broadening, not a surge, and it argues for patience rather than urgency in the markets still repairing.
New York, Milan and the Two Cities Doing Something Different
Outside Asia, New York and Milan complete the top five, and both are worth separating from the pack.
New York is growing despite a new tax, not in its absence. Luxury buyers have stayed active following the introduction of Mayor Zohran Mamdani’s tax on high-value second homes. Compass’ second-quarter Manhattan report recorded transactions above USD 20 million rising 25% year on year, with the USD 10 million to 20 million segment up 38.6%. The city is forecast to move into joint-second place with Tokyo by 2027, overtaking Hong Kong. Our read on the wider American picture is in US luxury home prices hitting new records.
Milan is Europe’s only consistent outperformer. It holds a top-five position across both forecast years, supported by wealth inflows and rising international interest, and by a pipeline of high-end developments, serviced residences and premium refurbishments that is finally broadening a historically thin luxury supply. The wider European ranking is covered in Europe’s leading cities for 2026.
London Remains the Outlier
London is the one major market forecast to decline in 2026, at -2.0%, before stabilising at 2.0% in 2027. Knight Frank attributes the pressure to a combination of non-dom reforms and high borrowing costs, which is a very different problem from the supply-and-confidence issues weighing on Beijing or Vancouver.
The distinction matters for buyers. A market correcting on inventory recovers when inventory clears. A market correcting on tax policy recovers when policy changes or when buyers reprice around it permanently. We tracked the mechanics of that in London’s prime property tax shockwaves.
What This Means If You Are Buying
Three practical readings come out of the data.
- The strongest markets are decelerating, not reversing. Seoul, Tokyo and Hong Kong all slow in 2027. Buying into momentum at this point means accepting a lower rate of appreciation than the past twelve months delivered.
- Monaco is the supply story to watch. It is forecast at a steady 4% in both years, but the survey data shows demand rising sharply against constrained supply. That combination typically resolves upward. Our coverage of the principality’s record year sits in Monaco’s record-breaking market.
- Correction markets reward patience over timing. Vancouver, Sydney, Melbourne, Beijing and Shanghai all improve in 2027 without returning to growth. Waiting costs little when the forecast is a smaller decline.
Bottom Line
Prime prices are set to accelerate into 2027, and the mechanism is worth understanding before acting on the headline. Growth rises from 1.6% to 2.2% not because the leaders are pulling harder but because the laggards stop dragging. Asia keeps the top of the table, Milan holds Europe’s best position, New York climbs on a widening American wealth base, and London remains the one significant market where the constraint is policy rather than cycle. For buyers with a five-year horizon, the more useful signal is the survey result: not one of the fifteen markets surveyed expects international buyer interest to fall. The wider structural driver behind that is set out in our look at the global ultra-high-net-worth population.
FAQ
What counts as prime residential property?
Prime generally refers to the top five per cent of a given housing market by value, which means the threshold differs sharply by city. Knight Frank’s index tracks luxury residential prices across leading global cities using its own research network, so a prime property in Lisbon and a prime property in Monaco are defined relative to their local markets rather than by a single absolute price.
Which cities are forecast to fall in 2027?
Only Beijing and Shanghai remain in negative territory in Knight Frank’s 2027 forecast, at -4% and -3% respectively. Vancouver and Sydney are forecast at zero. Every other city in the 20-city index is expected to post positive growth, which is the single biggest change from 2026.
Does a forecast of 2.2% mean prime property is a poor investment?
Capital growth is one component of return, and at the top end it is often not the main one. Prime residential is typically held for use, currency diversification, residency access and wealth preservation rather than yield. A low single-digit forecast in a market with constrained supply and rising foreign demand can still be a rational allocation for reasons a price index does not capture.
How reliable are prime market forecasts?
They are directional rather than precise, and the risks are asymmetric. Tax policy can reprice a market within a single budget, as London has demonstrated, and currency moves can wipe out or double a local price gain for an international buyer. Treat the ranking and the direction as the useful output, not the decimal.
